Analysis of transactions in the EUR / USD pair
Euro fell by 20 pips on Wednesday morning as traders took short positions amid a signal to sell that coincided with the MACD line being in the overbought area. Then, some time later, a signal to buy appeared, and this time it coincided with the MACD line being at the oversold area. This allowed traders to take long positions, provoking a 30-pip increase in the pair. Following that was another buy signal, but it had to be ignored because the MACD line was far from zero. The day ended with a decline, similar to the movement that happened in the morning.
Euro rallied yesterday morning, but it was offset by strong US reports in the afternoon. The data on durable goods orders exceeded expectations, so it was not a surprise that dollar demand rose.
But today an increase may be observed because there are a lot of EU statistics coming out. Germany will release its latest employment data, while the Euro area will publish a report on consumer confidence. Euro will rise if these indicators post better than expected figures. It will also jump if the ECB announces changes in its monetary policy.
In the afternoon though a number of reports will be released from the US. First is the 3rd quarter GDP data, while the second is data on jobless claims. If GDP growth turns out better than anticipated, dollar demand will surge again, which, in turn, will lead to a drop in EUR / USD.
For long positions:
Open a long position when euro reaches 1.1610 (green line on the chart) and take profit at 1.1652. Price will increase if data from Germany and the whole Euro area exceed expectations.
Before buying, make sure that the MACD line is above zero, or is starting to rise from it. It is also possible to buy at 1.1594, but the MACD line should be in the oversold area, as only by that will the market reverse to 1.1610 and 1.1652.
For short positions:
Open a short position when euro reaches 1.1594 (red line on the chart) and take profit at 1.1560. Strong US data could bring back pressure on the pair. It will also decline if the ECB maintains a soft monetary policy.
Before selling, make sure that the MACD line is below zero, or is starting to move down from it. Euro could also be sold at 1.1610, but the MACD line should be in the overbought area, as only by that will the market reverse to 1.1594 and 1.1560.
What's on the chart:
The thin green line is the key level at which you can place long positions in the EUR/USD pair.
The thick green line is the target price, since the quote is unlikely to move above this level.
The thin red line is the level at which you can place short positions in the EUR/USD pair.
The thick red line is the target price, since the quote is unlikely to move below this level.
MACD line - when entering the market, it is important to be guided by the overbought and oversold zones.
Important: Novice traders need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp fluctuations in the rate. If you decide to trade during the release of news, then always place stop orders to minimize losses. Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes.
And remember that for successful trading, you need to have a clear trading plan. Spontaneous trading decisions based on the current market situation is an inherently losing strategy for an intraday trader.
